经贸学院国际贸易系
王学惠 ?
Chapter 1 International trade &
practice
Lesson objectives
?Define Incoterms
?Understand how Incoterms assist traders
?Identify the main issues governing choice of
a suitable Incoterm
?State the main provisions of these Incoterms:
FOB,CFR,CIF,FCA,CPT,CIP
1.1 conception
Exchange of goods and services from one country to
another.
two issues----goods and services.
§ 1 Introduction to International
trade
经贸学院国际贸易系
王学惠 ?
1.2 Participants
The buyer
The seller
Banks
And other participants…
经贸学院国际贸易系
王学惠 ?
1.3 Cautions in international trade
The credit standing
Payment methods
Trade terms
The exchange risks
经贸学院国际贸易系
王学惠 ?
§ 2 Trade Terms
Trade terms are using a shorthand
expression or three-letter abbreviation
to indicate the formation of the unit price
and determine the responsibilities,
expenses and risks borne by two parties
as well as the time of the passing of the
property in the goods.
经贸学院国际贸易系
王学惠 ?
Examples
Chinese North-eastern Rice USD
200.00 per metric ton FOB Dalian
经贸学院国际贸易系
王学惠 ?
2.2 Why do we need trade terms?
?In import-export transactions,there are
usually many other extra costs in
addition to the cost of goods themselves.
?One obvious cost is that of transporting
the goods from the seller to the buyer.
经贸学院国际贸易系
王学惠 ?
question
?Think about what
other costs there might
be?
经贸学院国际贸易系
王学惠 ?
answer
–insurance of the goods
–import duty or taxes
--loading,unloading and handling charges
–packaging for export
–documentation charges
经贸学院国际贸易系
王学惠 ?
§ 3 International trade practice
Warsaw-Oxford Rules,1932 (CIF ONLY))
Revised American Foreign Trade
Definitions (6 kinds)
INCOTERMS 2000 (13 kinds)
经贸学院国际贸易系
王学惠 ?
3.1What are INCOTERMS
经贸学院国际贸易系
王学惠 ?
–insurance of the goods
–import duty or taxes
--loading,unloading and handling charges
–packaging for export
–documentation charges
经贸学院国际贸易系
王学惠 ?
3.2 INCOTERMS
To simplify communications between
traders about these matters,the
International Chamber of Commerce
has created,A set of thirteen standard
packages of terms and conditions,
designed to suit typical trading
conditions,These are called Incoterms.
经贸学院国际贸易系
王学惠 ?
VERSIONS
Incoterms are revised by the ICC from
time to time.
?The last revision,Incoterms 2000,came
into force on 1st January 2000,
replacing the previous edition,
Incoterms 1990.
经贸学院国际贸易系
王学惠 ?
ICC
International Chamber of Commerce
International non-governmental body
concerned with promotion of trade and
harmonisation of trading practice.
经贸学院国际贸易系
王学惠 ?
3.3 Table of Incoterms
EXW Ex Works DAF Delivered at Frontier
FCA Free Carrier DES Delivered Ex Ship
FAS Free Alongside Ship DEQ Delivered Ex Quay
FOB Free on Board DDU Delivered Duty Unpaid
DDP Delivered Duty Paid
CFR Cost and Freight
CIF Cost Insurance & Freight
CPT Carriage Paid To
CIP Carriage Insurance Paid To
经贸学院国际贸易系
王学惠 ?
§ 4 Main trade terms
4.1 FOB,Free on Board (named port of
shipment)
? A widely used term.
?Seller delivers goods,cleared for export and loaded
onto the ship,main carriage unpaid.
?Only applies to transport by sea or inland waterway.
Should only be used for conventional cargo,e.g.
break-bulk.
?For containerised or multi-modal transportation,FCA
is more appropriate.
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Delivers goods and load on
board ship
Transports goods from port of
departure to final destination,
bearing all costs including any
import duty
Provides an on-board receipt
of goods
Effect insurance and pay it,
Clears goods for export
经贸学院国际贸易系
王学惠 ?
Risks transfer
When the goods have effectively passed
the ship’s rail at the named port of
shipment,
经贸学院国际贸易系
王学惠 ?
4.2 CFR,Cost and Freight
(named port of destination)
?A widely used term.
?Seller delivers goods on board ship and pays
for main carriage to port of destination,but
does not pay for insurance.
?Only applies to transport by sea or inland
waterway.
?For containerised or multi-modal transportation,
CPT is more appropriate.
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Delivers goods and load on
board ship
Pays unloading fees with
freight not included
Provides an on-board receipt
of goods
Pays insurance premium
Clears goods for export Clears for import and pays
for import duty if applicable
Pays for main carriage to
named port of destination
经贸学院国际贸易系
王学惠 ?
Risks transfer
When the goods have effectively passed
the ship’s rail at the named port of
shipment,
经贸学院国际贸易系
王学惠 ?
4.3 CIF,Cost Insurance and Freight
(named port of destination)
?A widely used term,The seller delivers
goods on board ship and pays for main
carriage to port of destination,and also
pays for marine insurance.
?Note that the insurance required by this
term is minimal - the commercial
agreement may call for a higher level of
cover to be provided.
经贸学院国际贸易系
王学惠 ?
Only applies to transport by sea or inland
waterway,Should only be used for
conventional cargo,e.g,break-bulk.
?For containerised or multi-modal
movements,CIP is more appropriate
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Delivers goods and load on
board ship
Pays unloading fees with
freight not included
Provides an on-board receipt
of goods
Pays for transport of goods
to final destination
Clears goods for export Clears for import and pays
for import duty if applicable
Pays for main carriage to
named port of destination
and for marine insurance
经贸学院国际贸易系
王学惠 ?
Risks transfer
When the goods have effectively passed
the ship’s rail at the named port of
shipment
经贸学院国际贸易系
王学惠 ?
4.4 FCA,Free Carrier (named
place)
May be used for any mode of transport.
Common for containerised shipments.
Exporter
l delivers to a named place
l provides export licence
l pays export duties
Importer
pays all costs from named place (insurance,
import duties,taxes
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Delivers goods to the
nominated carrier to be in his
charge
If named place is not the
seller’s premises,unloads
goods from vehicle
If named place is seller’s
premises,loads goods onto
vehicle
Transport goods from named
place to final destination,
bearing all costs including
any import duty
Clears goods for export
经贸学院国际贸易系
王学惠 ?
Risks transfer
When the goods have been taken in
charge by the carrier at the named
place,
经贸学院国际贸易系
王学惠 ?
4.5 CPT,Carriage Paid To (named
place of destination)
Exporter:
l delivers to named destination
l pays cost and freight
l provides export licence
l provides transport document
Importer:
l pays cost and freight from named destionation
l pays insurance
? pays import duties
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Arranges and pay for delivery
of goods to named place
Arranges and pay for
transport of goods from
named place to final place
Provides a transport
document
Clear for import and pay duty
if applicable
Clears goods for export
经贸学院国际贸易系
王学惠 ?
Risks transfer
The Buyer assumes risks when the
seller has delivered the goods to the
first carrier in the journey.
经贸学院国际贸易系
王学惠 ?
4.6 CIP,Carriage and Insurance
Paid to (named place of
destination)
Seller:
l cost delivers to a named destination
l pays s,insurance & freight
l provides transport & insurance
documents
l pays export duties
Importer:
pays costs from named destination
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Arranges and pays for delivery
of goods to the named place
Provides a transport document
Clears goods for export Clears for import and pays for
import duty if applicable
Effect insurance till the named
place
经贸学院国际贸易系
王学惠 ?
Risks transfer
The Buyer assumes risks when the
seller has delivered the goods to the
first carrier in the journey.
王学惠 ?
Chapter 1 International trade &
practice
Lesson objectives
?Define Incoterms
?Understand how Incoterms assist traders
?Identify the main issues governing choice of
a suitable Incoterm
?State the main provisions of these Incoterms:
FOB,CFR,CIF,FCA,CPT,CIP
1.1 conception
Exchange of goods and services from one country to
another.
two issues----goods and services.
§ 1 Introduction to International
trade
经贸学院国际贸易系
王学惠 ?
1.2 Participants
The buyer
The seller
Banks
And other participants…
经贸学院国际贸易系
王学惠 ?
1.3 Cautions in international trade
The credit standing
Payment methods
Trade terms
The exchange risks
经贸学院国际贸易系
王学惠 ?
§ 2 Trade Terms
Trade terms are using a shorthand
expression or three-letter abbreviation
to indicate the formation of the unit price
and determine the responsibilities,
expenses and risks borne by two parties
as well as the time of the passing of the
property in the goods.
经贸学院国际贸易系
王学惠 ?
Examples
Chinese North-eastern Rice USD
200.00 per metric ton FOB Dalian
经贸学院国际贸易系
王学惠 ?
2.2 Why do we need trade terms?
?In import-export transactions,there are
usually many other extra costs in
addition to the cost of goods themselves.
?One obvious cost is that of transporting
the goods from the seller to the buyer.
经贸学院国际贸易系
王学惠 ?
question
?Think about what
other costs there might
be?
经贸学院国际贸易系
王学惠 ?
answer
–insurance of the goods
–import duty or taxes
--loading,unloading and handling charges
–packaging for export
–documentation charges
经贸学院国际贸易系
王学惠 ?
§ 3 International trade practice
Warsaw-Oxford Rules,1932 (CIF ONLY))
Revised American Foreign Trade
Definitions (6 kinds)
INCOTERMS 2000 (13 kinds)
经贸学院国际贸易系
王学惠 ?
3.1What are INCOTERMS
经贸学院国际贸易系
王学惠 ?
–insurance of the goods
–import duty or taxes
--loading,unloading and handling charges
–packaging for export
–documentation charges
经贸学院国际贸易系
王学惠 ?
3.2 INCOTERMS
To simplify communications between
traders about these matters,the
International Chamber of Commerce
has created,A set of thirteen standard
packages of terms and conditions,
designed to suit typical trading
conditions,These are called Incoterms.
经贸学院国际贸易系
王学惠 ?
VERSIONS
Incoterms are revised by the ICC from
time to time.
?The last revision,Incoterms 2000,came
into force on 1st January 2000,
replacing the previous edition,
Incoterms 1990.
经贸学院国际贸易系
王学惠 ?
ICC
International Chamber of Commerce
International non-governmental body
concerned with promotion of trade and
harmonisation of trading practice.
经贸学院国际贸易系
王学惠 ?
3.3 Table of Incoterms
EXW Ex Works DAF Delivered at Frontier
FCA Free Carrier DES Delivered Ex Ship
FAS Free Alongside Ship DEQ Delivered Ex Quay
FOB Free on Board DDU Delivered Duty Unpaid
DDP Delivered Duty Paid
CFR Cost and Freight
CIF Cost Insurance & Freight
CPT Carriage Paid To
CIP Carriage Insurance Paid To
经贸学院国际贸易系
王学惠 ?
§ 4 Main trade terms
4.1 FOB,Free on Board (named port of
shipment)
? A widely used term.
?Seller delivers goods,cleared for export and loaded
onto the ship,main carriage unpaid.
?Only applies to transport by sea or inland waterway.
Should only be used for conventional cargo,e.g.
break-bulk.
?For containerised or multi-modal transportation,FCA
is more appropriate.
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Delivers goods and load on
board ship
Transports goods from port of
departure to final destination,
bearing all costs including any
import duty
Provides an on-board receipt
of goods
Effect insurance and pay it,
Clears goods for export
经贸学院国际贸易系
王学惠 ?
Risks transfer
When the goods have effectively passed
the ship’s rail at the named port of
shipment,
经贸学院国际贸易系
王学惠 ?
4.2 CFR,Cost and Freight
(named port of destination)
?A widely used term.
?Seller delivers goods on board ship and pays
for main carriage to port of destination,but
does not pay for insurance.
?Only applies to transport by sea or inland
waterway.
?For containerised or multi-modal transportation,
CPT is more appropriate.
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Delivers goods and load on
board ship
Pays unloading fees with
freight not included
Provides an on-board receipt
of goods
Pays insurance premium
Clears goods for export Clears for import and pays
for import duty if applicable
Pays for main carriage to
named port of destination
经贸学院国际贸易系
王学惠 ?
Risks transfer
When the goods have effectively passed
the ship’s rail at the named port of
shipment,
经贸学院国际贸易系
王学惠 ?
4.3 CIF,Cost Insurance and Freight
(named port of destination)
?A widely used term,The seller delivers
goods on board ship and pays for main
carriage to port of destination,and also
pays for marine insurance.
?Note that the insurance required by this
term is minimal - the commercial
agreement may call for a higher level of
cover to be provided.
经贸学院国际贸易系
王学惠 ?
Only applies to transport by sea or inland
waterway,Should only be used for
conventional cargo,e.g,break-bulk.
?For containerised or multi-modal
movements,CIP is more appropriate
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Delivers goods and load on
board ship
Pays unloading fees with
freight not included
Provides an on-board receipt
of goods
Pays for transport of goods
to final destination
Clears goods for export Clears for import and pays
for import duty if applicable
Pays for main carriage to
named port of destination
and for marine insurance
经贸学院国际贸易系
王学惠 ?
Risks transfer
When the goods have effectively passed
the ship’s rail at the named port of
shipment
经贸学院国际贸易系
王学惠 ?
4.4 FCA,Free Carrier (named
place)
May be used for any mode of transport.
Common for containerised shipments.
Exporter
l delivers to a named place
l provides export licence
l pays export duties
Importer
pays all costs from named place (insurance,
import duties,taxes
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Delivers goods to the
nominated carrier to be in his
charge
If named place is not the
seller’s premises,unloads
goods from vehicle
If named place is seller’s
premises,loads goods onto
vehicle
Transport goods from named
place to final destination,
bearing all costs including
any import duty
Clears goods for export
经贸学院国际贸易系
王学惠 ?
Risks transfer
When the goods have been taken in
charge by the carrier at the named
place,
经贸学院国际贸易系
王学惠 ?
4.5 CPT,Carriage Paid To (named
place of destination)
Exporter:
l delivers to named destination
l pays cost and freight
l provides export licence
l provides transport document
Importer:
l pays cost and freight from named destionation
l pays insurance
? pays import duties
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Arranges and pay for delivery
of goods to named place
Arranges and pay for
transport of goods from
named place to final place
Provides a transport
document
Clear for import and pay duty
if applicable
Clears goods for export
经贸学院国际贸易系
王学惠 ?
Risks transfer
The Buyer assumes risks when the
seller has delivered the goods to the
first carrier in the journey.
经贸学院国际贸易系
王学惠 ?
4.6 CIP,Carriage and Insurance
Paid to (named place of
destination)
Seller:
l cost delivers to a named destination
l pays s,insurance & freight
l provides transport & insurance
documents
l pays export duties
Importer:
pays costs from named destination
经贸学院国际贸易系
王学惠 ?
Detailed responsibilities
Seller’s responsibilities Buyer’s responsibilities
Arranges and pays for delivery
of goods to the named place
Provides a transport document
Clears goods for export Clears for import and pays for
import duty if applicable
Effect insurance till the named
place
经贸学院国际贸易系
王学惠 ?
Risks transfer
The Buyer assumes risks when the
seller has delivered the goods to the
first carrier in the journey.
